Overcoming the next mining skills shortage

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The human resources trends that emerged in mining last year are set to intensify in 2018.

A lot changed for mine workers in 2017 as the previously common reports of redundancies became much rarer. Instead, the industry started to see a situation develop that many would have thought impossible during the mining boom: leading miners like Roy Hill targeting candidates without previous mining experience.

But that was almost a by-product of another familiar trend from the past that had re-emerged — skills shortages. By mid year, recruitment agencies were reporting that roles like drill and blast technicians, boilermakers, mechanical, electrical and heavy diesel fitters, and even geologists were in short supply in various parts of the country.

The significant lift in activity around the country instigated the latest mining skills shortage, as the mining construction boom translated into increased production, new mines were launched and existing operations restarted as commodity prices improved to economical levels.

Hays Australia WA mining leader Chris Kent said the growth in the number of operating mines over the past few years was the key factor that led to the current skills shortage.

“We are at record production levels — therefore, unless a component of a mine supply chain has been disrupted by technology then a record level of production workers is needed as well,” Kent told Australian Mining.

“That’s where it is coming from. Obviously, we also lost a lot of people from the sector when those jobs weren’t around for the last four or five years.”

Despite output reaching new heights, another wave of new mine developments is on track to add to Australia’s production profile this year. It has been common to see growth in commodities like iron ore, coal and gold over the past decade, but Australia will soon also welcome diverse operations in metals like lithium.

“New mines are going to further heighten the skills shortage, especially with the emergence of new commodity classes,” Kent said. “The recovery started with iron ore and coal, but they are the commodities that have the scale to utilise some of the technological advances.

“When it comes to gold, copper, lithium and nickel, they often have more traditional supply chains and that’s just a straight upswing in personnel requirements.”

Australia’s skyrocketing production isn’t the only factor causing skills shortages. Technology and automation are also contributing to the skills gap, according to Newport Consulting, and have the potential to grow as a concern.

In a recent Mining Business Outlook Report, Newport stated that sentiment in the mining industry was positive, with the number of miners showing cautious optimism increasing by 55 per cent since 2015.

The report also found that almost three quarters of industry leaders were showing renewed confidence in the sector’s growth. However, it looks as though skills shortages, along with cost pressures, may be a threat to this growth in confidence.

The coal industry may face skills challenges.

Newport consulting managing director David Hand believes a spate of mining companies are concerned that Australia will face a growing skills gap, particularly in the areas of technology and automation.

“We spoke to many companies of all sizes that voiced concern over a widening skills gap, giving way to a pressing need to upskill and re-train the workforce. Miners must be able to meet the new digital demands of Australia’s mining future,” Hand said.

With a growing gap in the number oftechnical employees trained to manage future autonomous roles, Hand added there were signs that mining was “getting on the front foot” to ensure its workforce remained agile and flexible.

“Rio Tinto is a prime example of a company leading the field in this area, having recently partnered with the WA Government and TAFE Australia to provide vocational training in robotics for mining workers. The government should follow Rio Tinto’s lead to close this growing skills gap, which is occurring because of technology disruption,” Hand said.

A key takeaway from the report was the push from mining leaders to embrace new technology, with automaton continuing to become vital for operations.

Automation and Big Data were the leading priorities, with 21 per cent of respondents believing automated haulage vehicles will be the top technology influence to impact the market this year.

Drones, which are used to map, survey and explore mines, were considered another key area for investment. Kent said the challenge mining faced when sourcing tech-savvy personnel was competition with other industries, such as finance, manufacturing and agriculture.

“In some ways mining is moving relatively late into this area,” Kent said. “That means we are competing with lots of different industries in that regard.

“To date, that competition has been largely led from a mining perspective by the majors, but as technology develops and advances it generally gets cheaper.

“I think we might see more of the mid-tier and smaller players start to increase their technology platforms, and therefore be seeking skills in that area as well.”

The flipside of skills shortages generally means a couple of things for mine workers — more opportunities for permanent work and higher salaries.

The marketplace for permanent work has seemingly made a welcome return already. Human resources agency DFP Recruitment reported that permanent job vacancies increased by 44.5 per cent during 2017 after a 4.4 per cent improvement in December.

The rise in permanent vacancies lifted this category to its highest point on DFP’s jobs index since mid- 2015.

“While this level infers that vacancies are still 18 per cent lower than late 2013 when measurement commenced, it is still a massive turnaround after three years of decline,” DFP explained.

Temporary and casual opportunities at DFP were also significantly higher in 2017, increasing by 31.2 per cent. Iron ore was the standout commodity when it came to increasing job prospects in 2017. Demand shot up 67.6 per cent over the 12 months.

Evidence that mining salaries have increased isn’t as clear. However, Kent indicated that bulk commodity sectors like coal were at least assessing salary rates.

Kent said coal’s challenge was that salaries dropped so low during the downturn that many workers in the sector moved to other industries with similar wages closer to home.

“In Queensland, coal has lost a lot of people within their own state to rival industries,” Kent explained.

“What they are trying to do is work on staff engagement strategies to retain people and constantly reassess their wage rates.

“They are also assessing rosters to ensure they have family friendly rosters. The intention in Queensland, and particularly in coal, is for residential or drive-in, drive-out (DIDO) workforces, which is probably more possible when the employer holds all the cards.

“Maybe when candidates start to hold more of the cards because they have more options that could come under threat.”

While more opportunities and rising salaries may be a positive for mine workers, Kent warned of the counter-risks for mining companies if the increase stemmed from worsening skills shortages.

“The end result of a chronic shortage is significant wage growth but also a significant drop in productivity and efficiency at the mines. There are some interesting times ahead in the next year or two,” Kent said.

Sounds like a similar situation to what the industry experienced during the mining boom, only this time it is very unlikely Australia will hit those peaks again.